Q3 2025 RADCOM Ltd Earnings Call
Some limited results conference call for the third quarter of 2025, all participants are at present in listen only mode. Following management's formal presentation instructions will be given for the question and answer session for operator assistance. During the conference. Please press Star Zero as a reminder, this conference is being recorded and will be available for.
Operator: Welcome to the RADCOM Ltd. Results Conference Call for Q3 2025. All participants are at present in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. For operator assistance during the conference, please press star 0. As a reminder, this conference is being recorded and will be available for replay at the company's website at www.radcom.com later today. On the call are Benny Eppstein, RADCOM's CEO, and Hadar Rahav, RADCOM's CFO. Please note that management has prepared a presentation for your reference that will be used during the call. If you have not downloaded it yet, you may do so through the link in the investor section of RADCOM's website at www.radcom.com/investor-relations. Before we begin, I would like to review the safe harbor provision. This conference call will contain forward-looking statements.
Operator: Welcome to the RADCOM LTD Results Conference call for the third quarter of 2025. All participants are present in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded and will be available for replay at the company's website at www.radcom.com later today. On the call are Benny Eppstein, RADCOM CEO, and Adar Rahav, RADCOM CFO. Please note that management has prepared a presentation for your reference that will be used during the call. If you have not downloaded it yet, you may do so through the link in the investor section of RADCOM's website at www.radcom.com/investor-relations. Before we begin, we'd like to review the safe harbor provision. This conference call will contain forward-looking statements.
A replay at the company's website at Www Dot Broadcom Dot com later today.
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Before we begin I would like to review the Safe Harbor provision. This conference call will contain forward looking statements forward looking statements in the conference call and both federal risk and uncertainties, including but not limited to the company's statements about its commitment to deliver solutions that are transforming the assurance landscape continuing to do.
Operator: Forward-looking statements in the conference call involve several risks and uncertainties, including, but not limited to, the company's statement about its commitment to deliver solutions that are transforming the assurance landscape, continued adoption and investment in AI and 5G, as well as other favorable market trends. The resilience of the company's operating model and the value of its AI-driven assurance solution, providing lowering total cost of ownership and enabling comprehensive observability across customer networks, converting the company's robust pipeline into revenue, expanding the company's current install base, levels of investment, and advancing the company's strategic partnerships. Expectation for initial revenue from certain partnerships and timing thereof, as well as its full year 2025 revenue guidance, expectation with respect to margin and expenses and future growth, momentum opportunities, and profitability. The company does not undertake to update forward-looking statements.
Operator: Forward-looking statements in the conference call involve several risks and uncertainties, including but not limited to the company's statement about its commitment to delivered solutions that are transforming the assurance landscape, continued adoption and investment in AI and 5G, as well as other favorable market trends, the resilience of the company's operating model, and the value of its AI-driven assurance solution, providing lowering total cost of ownership and enabling comprehensive observability across customer networks, converting the company's robust pipeline into revenue, expanding the company's current installed base levels of investment, and advancing the company's strategic partnerships, expectation for initial revenue from certain partnerships and timing thereof, as well as its full year 2025 revenue guidance, expectation with respect to margin and expenses and future growth, momentum opportunities, and profitability. The company does not undertake to update forward-looking statements.
<unk> shown an investment in a I M. Five G as well as other favorable market trends the resilience of the company's operating model and the value of its AI driven assurance solution, providing lowering total cost of ownership and enabling comprehensive.
Ziv ability across customer networks, converting the company's robust pipeline into revenue expanding the company's carved in stone base levels of investment in advancing the company's strategic partnerships expectation for initial revenue from certain partnerships and timing thereof as well.
Its full year 2025 revenue guidance expectation with respect to margin and expenses to future growth momentum opportunities and profitability. The company does not undertake to update forward looking statements.
The safe harbor provisions, including risks that could cause actual results to differ from those forward looking statements are outlined in today's press release and the company's SEC filings.
Operator: The full safe harbor provisions, including risks that could cause actual results to differ from those forward-looking statements, are outlined in today's press release and the company's SEC findings. In this conference call, management will refer to certain non-GAAP financial measures, which are provided to enhance the user's overall understanding of the company's financial performance by excluding non-cash stock-based compensation that has been expensed in accordance with ASC topic 718, financial income expenses related to acquisitions and amortization of intangible assets related to acquisitions. Non-GAAP results provide information helpful in assessing RADCOM core operating performance and evaluating and comparing the results of operations consistently from period to period. The presentation of this additional information is not meant to be considered a substitute for the corresponding financial measures prepared in accordance with the generally expected accounting principles.
Operator: The full safe harbor provisions, including risks that could cause actual results to differ from those forward-looking statements, are outlined in today's press release and the company's SEC filings. In this conference call, management will refer to certain non-GAAP financial measures, which are provided to enhance the user's overall understanding of the company's financial performance. By excluding non-cash stock-based compensation that has been expensed in accordance with ASC Topic 718, financial income expenses related to acquisitions and amortization of intangible assets related to acquisitions, non-GAAP results provide information helpful in assessing RADCOM core operating performance and evaluating and comparing the results of operations consistently from period to period. The presentation of this additional information is not meant to be considered a substitute for the corresponding financial measures prepared in accordance with the Generally Accepted Accounting Principles.
In this conference call management will refer to certain non-GAAP financial measures, which are provided to enhance the overall understanding of the company's financial performance.
By excluding non cash stock based compensation that is being expensed in accordance with the Ace S. C topic, 718 financial income and expenses related to acquisitions and amortization of intangible assets related to acquisitions.
non-GAAP results provide information helpful. In assessing the let's call them core operating performance in evaluating and comparing our results of operations consistently from period to period. The presentation of this additional information is not meant to be considered a substitute for their corresponding financial.
Long measures prepared in accordance with the generally expected accounting principles.
Investors are encouraged to review the recommendation of the GAAP to non-GAAP financial measures, including the quarterly earnings release available on our website.
Operator: Investors are encouraged to review the reconciliation of GAAP to non-GAAP financial measures, including the quarterly earnings release available on our website. I would like to turn over the call to Benny. Please go ahead.
Operator: Investors are encouraged to review the reconciliation of GAAP to non-GAAP financial measures, including the quarterly earnings release available on our website. Now, we'd like to turn over the call to Benny. Please go ahead.
Now I'd like to turn off all the calls from Danny. Please go ahead.
Thank you operator, and good morning, everyone.
Benny Eppstein: Thank you, operator, and good morning, everyone. The Q3 was a record quarter for RADCOM, marked by strong growth and further evidence of our scalable and profitable business model. We are deepening deployments with existing customers while continuing to develop new opportunities in the market. Operators are increasing their investment in 5G Standalone networks and AI operations, AIOps, to enhance efficiencies, improve the customer experiences, and reduce costs. As the market evolve, RADCOM holds strong competitive edge with our field-proven next generation assurance platform, RADCOM ACE. Turning to slide 7. I'd like to give a brief overview of the Q3 results. For the Q3 2025, RADCOM achieved record revenue of $18.4 million, representing 16.2% year-over-year growth with continued profitability, expanding profit margins, and positive cash generation.
Benny Eppstein: Thank you, Operator, and good morning, everyone. The third quarter was a record quarter for RADCOM, marked by strong growth and further evidence of our scalable and profitable business model. We are deepening deployments with existing customers while continuing to develop new opportunities in the market. Operators are increasing their investment in 5G standalone networks and AI operations, AIOPS, to enhance efficiencies, improve the customer experiences, and reduce costs. As the market evolves, RADCOM holds a strong competitive edge with our field-proven next-generation assurance platform, RADCOM ACE. Turning to slide seven, I'd like to give a brief overview of the Q3 results. For the third quarter of 2025, RADCOM achieved record revenue of $18.4 million, representing 16.2% year-over-year growth with continued profitability, expanding profit margins, and positive cash generation. We achieved record non-GAAP operating income of $3.8 million, representing 20.9% of revenue.
In the third quarter was a record quarter for radical <unk>.
By strong growth and further evidence of our scalable and profitable business model.
Deepening deployment with existing customers, while continuing to develop new opportunities in the market.
Operators are increasing their investment in <unk>, Standalone networks and AI operations.
To enhance efficiencies improve the customer experiences and reduce costs.
As the markets evolve roskam holds strong competitive edge with our field proven next generation assurance platform Broadcom Ace.
Turning to slide seven I'd like to give a brief overview of the Q3 results.
For the third quarter of 2025, Roscoe achieved record revenue of $18 $4 million, representing 16, 2% year over year growth with continued profitability expanding profit margins and positive cash generation.
We achieved record non-GAAP operating income of $3 8 million.
Benny Eppstein: We achieved record non-GAAP operating income of $3.8 million, representing 20.9% of revenue. This is the highest since 2017, reflecting both the scalability of our model and the disciplined execution across our operations. Our results demonstrate a strong balance between growth and profitability, as evidenced by significant margin expansion. Importantly, we generated a positive cash flow of $5.1 million and ended the quarter with cash balance of $106.7 million and no debt. Our strong balance sheet positions us well for continued investment and strategic flexibility as we pursue both profitable organic expansion and targeted inorganic growth. Turning to slide 8. At the broader market level, RADCOM is well-positioned to capitalize on the strong and durable tailwinds driving telecom spending. AI-native network are rapidly evolving, enabling operators to deliver superior customer experiences.
Representing 29% of revenue.
This is the highest since 2017, reflecting both the scalability of our model and the disciplined execution across our operations.
Benny Eppstein: This is the highest since 2017, reflecting both the scalability of our model and the disciplined execution across our operations. Our results demonstrate a strong balance between growth and profitability, as evidenced by significant margin expansion. Importantly, we generated a positive cash flow of $5.1 million and ended the quarter with a cash balance of $106.7 million and no debt. Our strong balance sheet positions us well for continued investment and strategic flexibility as we pursue both profitable organic expansion and targeted inorganic growth. Turning to slide eight, at a broader market level, RADCOM is well positioned to capitalize on the strong and durable tailwinds driving telecom spending. AI-native networks are rapidly evolving, enabling operators to deliver superior customer experiences. At the same time, they offer new opportunities to improve operational efficiency.
Our results demonstrate a strong balance between growth and profitability as evidenced by a significant margin expansion.
Importantly, we generated a positive cash flow of $5 $1 million and ended the quarter with cash balance of 106 $7 million and no debt.
Strong balance sheet positions us well for continued investment in strategic flexibility as we pursue both.
Profitable organic expansion and targeted inorganic growth.
Turning to slide eight at the broader market level <unk> is well positioned to capitalize on the strong and durable tailwind driving telecom spending.
AI native network are rapidly evolving enabling operators to deliver superior customer experiences.
Same time, they offer new opportunities to improve operational efficiency.
Benny Eppstein: At the same time, they offer new opportunities to improve operational efficiency. To capture this value, operators need trusted data and deep telecom domain expertise to power AI use cases and ensure end-to-end network observability. These dynamics give us a distinct advantage built on years of investment in assurance innovation, telecom domain AI, and strong ecosystem partnerships. It's aligned perfectly with our strategic and product roadmap. As AI innovation accelerates, a second major shift is taking hold across the telecom landscape. Operators are doubling down on customer experience as a core driver of retention, reduced churn, and long-term revenue growth. To compete effectively, they need real-time visibility across network operations, enabling them to detect issues and anomalies before they impact subscribers proactively. These trends aligns directly with our value proposition to deliver end-to-end intelligent cloud-native solutions that provide granular insights into users and services at highly cost-effective rate.
To capture this value operators need trusted data and deep telecom domain expertise to power AI use cases, and ensure end to end network observer ability.
Benny Eppstein: To capture this value, operators need trusted data and deep telecom domain expertise to power AI use cases and ensure end-to-end network observability. These dynamics give us a distinct advantage built on years of investment in assurance innovation, telco domain AI, and strong ecosystem partnerships. It's aligned perfectly with our strategic and product roadmap. As AI innovation accelerates, a second major shift is taking hold across the telecom landscape. Operators are doubling down on customer experience as a core driver of retention, reduced churn, and long-term revenue growth. To compete effectively, they need real-time visibility across network operations, enabling them to detect issues and anomalies before they impact subscribers proactively. These trends align directly with our value proposition to deliver end-to-end intelligent cloud-native solutions that provide granular insights into users and services at a highly cost-effective rate. These capabilities offer significant savings compared to competing solutions.
These dynamics give us a distinct advantage built on years of investment and assurance innovation telco domain, AI and strong ecosystem partnerships.
It aligns perfectly with our strategic and product.
Okay.
Is AI innovation accelerates.
Major shift is taking hold across the telecom landscape.
Operators are doubling down on customer experience is a core driver of retention reduced churn and long term revenue growth to.
To compete effectively they need real time visibility across the network operations, enabling them to detect issues and anomalies before the impact of scrubbers proactively.
These trends aligns directly with our value proposition to deliver end to end intelligent cloud native solution that provides granular insights into users and services, it's highly cost effective rate.
These capabilities offer significant savings compared to competing solutions.
Benny Eppstein: These capabilities offer significant savings compared to competing solutions. We believe this position us strongly for new opportunities to demand for customer experience insights and intelligent service assurance continues to rise. Turning to slide 9, let me speak to our partnership strategy. The Q3 performance underscore the continued success of our strategy. We are deepening our strategic partnership with NVIDIA, ServiceNow, and system integrators. This helps strengthen our technology leadership, expand our market reach, and enhance customer retention. We are focusing on developing an agentic AI-powered automation layer with our partner systems, which will enable networks to communicate autonomously and complete complex workflows and business processes. We anticipate initial revenue contributions from these partnerships in 2026. In Q3, we also completed the integration of RADCOM AIM, our AIOps solutions, with ServiceNow service operation management platform.
We believe this positions us strongly for new opportunities to demand for customer experience insights and intelligence services continues to rise.
Benny Eppstein: We believe this positions us strongly for new opportunities as demand for customer experience insights and intelligent service assurance continues to rise. Turning to slide nine, let me speak to our partnership strategy. The third quarter performance underscores the continued success of our strategy. We are deepening our strategic partnership with NVIDIA, ServiceNow, and system integrators. This helps strengthen our technology leadership, expand our market reach, and enhance customer retention. We are focusing on developing an agentic AI-powered automation layer with our partner systems, which will enable networks to communicate autonomously and complete complex workflows and business processes. We anticipate initial revenue contributions from these partnerships in 2026. In the third quarter, we also completed the integration of RADCOM AIM, our AIOPS solutions with ServiceNow Service Operations Management Platform. Our solution is now certified and available as a connector in the ServiceNow store.
Turning to slide nine.
Let me speak to our partnership strategy.
The third quarter performance underscore the continued success of our strategy. We are deepening our strategic partnership with Nvidia service low and system integrators. This helps strengthen our technology leadership expand our market reach and enhance customer retention.
We are focusing on developing an agenda AI powered automation layer with our partner systems, which will enable networks to communicate autonomously and complete complex workflows and business processes.
We anticipate initial revenue contributions from these partnerships in 2026.
In the third quarter. We also completed the integration of Rustled aim our AI ops solutions with service low service operation management platform.
Our solution is now certified and available as a collector in the service low store.
Benny Eppstein: Our solution is now certified and available as a connector in the ServiceNow store. This enables continuous real-time network monitoring and supports advanced use cases, such as intelligent anomaly detection and complaint validation. It also offers a comprehensive 360-degree view of network data for automated workflows, enhancing service quality and operational performance. Turning to slide 10. We recently launched our next-generation high-capacity user analytics solution powered by NVIDIA BlueField-3 Data Processing Units or DPUs. RADCOM is the first network assurance vendor to capture speeds up to 400 Gb per second on a single server. This solution demonstrated a reduction of up to 75% in operational costs in field trials compared to traditional network probes. Furthermore, it provides complete visibility without requiring any compromises due to cost constraints.
This enables continuous real time network monitoring and supports advanced use cases, such as intelligent anomaly detection and complaint validation.
Benny Eppstein: This enables continuous real-time network monitoring and supports advanced use cases such as intelligent anomaly detection and complaint validation. It also offers a comprehensive 360-degree view of network data for automated workflows, enhancing service quality and operational performance. Turning to slide ten, we recently launched our next-generation high-capacity user analytics solution powered by NVIDIA BlueField 3 data processing units, or DPUs. RADCOM is the first network assurance vendor to capture speeds up to 400 gigabytes per second on a single server. This solution demonstrated a reduction of up to 75% in operational costs in field trials compared to traditional network probes. Furthermore, it provides complete visibility without requiring any compromises due to cost constraints. In essence, the solution delivers real-time analytics at a fraction of the cost, a key enabler for 5G assurance and AIOPS.
It also offers a comprehensive 360 degree view of network data for automated workflows enhancing service quality and operational performance.
Turning to slide 10.
We recently launched our next generation high capacity user of the lytic solution powered by Nvidia Bluefield, III data processing units or <unk>.
<unk> is the first network assurance vendor to capture speeds up to 400 gigabit per second single server.
This solution demonstrated a reduction of up to 75% and operational costs in field trials compared to traditional network probes.
Furthermore, it provides complete visibility without requiring any compromises due to cost constraints in <unk>.
The solution delivers real time analytics at a fraction of the cost a key enabler for five D assurance and AI Oaks.
Benny Eppstein: In essence, the solution delivers real-time analytics at a fraction of the cost, a key enabler for 5G assurance and AIOps. This innovative DPU-based solution is seamlessly integrated into our comprehensive automated service assurance platform and agentic AI framework, which drives business processes across care, service management, and network orchestration. This empowers operators to capture and process massive volumes of network traffic efficiently, bridging the gap between engineering and customer-facing teams. Our NVIDIA DPU-powered high-capacity user analytic solution is now in the lab and field trials with key customers, showing promising momentum. RADCOM is also advancing its agentic AI solution with accelerated computing to provide telecom operators with real-time actionable customer and service insights. These innovations enable telecom operators to automate network for enhanced efficiency, superior service quality, and sustained long-term value.
This innovative GPU based solution is seamlessly integrated into our comprehensive automated service assurance platform energetic air framework, which drives business processes across care service management and network orchestration.
Benny Eppstein: This innovative DPU-based solution is seamlessly integrated into our comprehensive automated service assurance platform and agentic AI framework, which drives business processes across care, service management, and network orchestration. This empowers operators to capture and process massive volumes of network traffic efficiently, bridging the gap between engineering and customer-facing teams. Our NVIDIA DPU-powered high-capacity user analytics solution is now in the lab and field trials with key customers, showing promising momentum. RADCOM is also advancing its agentic AI solution with accelerated computing to provide telecom operators with real-time actionable customer and service insights. These innovations enable telecom operators to automate network for enhanced efficiency, superior service quality, and sustained long-term value. Our agentic AI architecture enables us to expand our addressable market by reaching operators at a time when demand for proactive analytics-based network visibility is rising.
This empowers operators to capture and process massive volumes of network traffic efficiently bridging the gap between engineering and customer facing.
Our Nvidia GPU powered high capacity use our analytics solution is now in the lab and field trials with key customers showing promising momentum.
Broadcom is also advancing its argentic AI solutions with accelerated computing to provide telecom operators with real time actionable customer and service insights. These innovations enable telecom operators to automate network for enhanced efficiency Superior service quality has sustained long term value.
Okay.
Our IDENTIKEY architecture enable us to expand our addressable market by reaching operators at the time when demand for proactive.
Benny Eppstein: Our agentic AI architecture enable us to expand our addressable market by reaching operators at a time when demand for proactive analytics-based network visibility is rising. In our customer engagement, we're seeing a clear industry shift, particularly in Europe, but also across other regions. Some operators are accelerating their network modernization plans, recognizing the strategic importance of moving from legacy monolithic solutions to advanced cloud-native platform that leverage AI to automate operations. We've seen this trend firsthand with customers such as Norlys and more recently, 1GLOBAL. This positive momentum reflects the growing demand for innovative, future-ready assurance solution, further solidifying RADCOM's position as trusted partner for operators seeking to enhance network performance, efficiency, and competitive advantage.
Base network visibility is rising.
Customer engagement, we're seeing a clear industry shift, particularly in Europe, but also across other regions.
Benny Eppstein: In our customer engagement, we're seeing a clear industry shift, particularly in Europe, but also across other regions. Some operators are accelerating their network modernization plans, recognizing the strategic importance of moving from legacy monolithic solutions to advanced cloud-native platforms that leverage AI to automate operations. We've seen this trend firsthand with customers such as Norliss and, more recently, OneGlobal. This positive momentum reflects the growing demand for innovative, future-ready assurance solutions, further solidifying RADCOM's position as a trusted partner for operators seeking to enhance network performance, efficiency, and competitive advantage. As noted on slide 11, we recently announced a new partnership with OneGlobal to deploy RADCOM ACE, enhancing customer experiences across Europe, North America, and Asia, and supporting more than 43 million connections. RADCOM ACE will provide voice and data monitoring, enabling precise and highly efficient troubleshooting across all required protocols.
Some operators are accelerating their network modernization place.
Recognizing the strategic importance of moving from legacy monolithic solutions for advanced cloud native platform that leverage AI to automate operations.
We've seen these trends firsthand with customers such as lower lease and more recently one global.
This positive momentum reflects the growing demand for innovative future Arabia assurance solution.
Further solidifying <unk> position as trusted partner for.
Operators seeking to enhance network performance efficiency and competitive advantage.
As noted on slide 11.
We recently announced a new partnership with one global to deploy at rack com ace enhancing customer experiences across Europe, Latin America, and Asia, and supporting more than 43 million collections right.
Benny Eppstein: As noted on slide 11, we recently announced a new partnership with 1GLOBAL to deploy RADCOM ACE, enhancing customer experiences across Europe, North America, and Asia, and supporting more than 43 million connections. RADCOM ACE will provide voice and data monitoring, enabling precise and highly efficient troubleshooting across all required protocols. We also secured a business expansion with one of our existing customers. This progress underscore our land and expand strategy. As we demonstrate our value proposition, we are well-positioned to grow as our customers expand their network and manage increased network traffic. Let me now speak to our install base. Turning to slide 12. AT&T continues to add subscribers, RADCOM continues to support their net add gains, providing real-time assurance for service quality and user experience.
Broadcom Ace will provide voice and data monitoring, enabling precise and highly efficient troubleshooting across all required protocols.
We also secured a business expansion with one of our existing customers. This progress underscore our lend and expense strategy as we demonstrate our value proposition, we are well positioned to grow as our customers expand their network and manage increased network traffic.
Benny Eppstein: We also secured a business expansion with one of our existing customers. This progress underscores our learn and expand strategy. As we demonstrate our value proposition, we are well positioned to grow as our customers expand their network and manage increased network traffic. Let me now speak to our installed base. Turning to slide 12, AT&T continues to add subscribers, and RADCOM continues to support their net add gains, providing real-time assurance for service quality and user experience. Rakuten Mobile continues to expand its 5G footprint, surpassing 9 million subscribers in Japan and demonstrating increasing momentum in one of the world's most mature mobile markets. The operators continue to rely on RADCOM Assurance Solution as part of its effort to deliver scalable, reliable, high-quality performance across its fully virtualized cloud-native network. Across our customer base, we're seeing broader deployments and deeper integration of our AI-powered capabilities.
Let me now speak to our installed base turning to slide 12.
AT&T continues to add subscribers and Rod Com continues to support their net add gains providing real time assurance for service quality and user experience.
Barack within mobile continues to expand its <unk> footprint, surpassing 9 million subscribers in Japan, and demonstrating increasing momentum in one of the world's most mature mobile markets.
Benny Eppstein: Rakuten Mobile continues to expand its 5G footprint, surpassing 9 million subscribers in Japan and demonstrating increasing momentum in one of the world's most mature mobile markets. The operators continues to rely on RADCOM Assurance solution as part of its effort to deliver scalable, reliable, high quality performance across its fully virtualized cloud-native network. Across our customer base, we're seeing broader deployment and deeper integration of our AI-powered capabilities. These solutions are enabling operators to achieve new level of automation, performance, and efficiency. Go-to-market activities. As noted in slide 13, we attend many key industry events in Q3, including DT Campus, Innovate Americas, Network X, and others, where we met with potential and current customers and business partners. Our cutting-edge solution continued to receive strong recognition from leading industry bodies.
Though the operators continues to rely on rack com assurance solution as part of its effort to deliver scalable reliable high quality performance of course, it's fully virtualized cloud Native network.
Across our customer base, we're seeing broader deployment and deeper integration of our AI powered capabilities. These solutions are enabling operators to achieve new level of automation performance and efficiency.
Benny Eppstein: These solutions are enabling operators to achieve new levels of automation, performance, and efficiency. Go-to-market activities. As noted in slide 13, we attend many key industry events in Q3, including DT Campus, Innovate Americas, Network X, and others, where we met with potential and current customers and business partners. Our cutting-edge solution continues to receive strong recognition from leading industry bodies. Most recently, our agentic AI solution, RADCOM Predictive Complaint Resolution, was honored with Best AI/ML Innovation Award at the Global Connectivity Award in London. The prestigious awards saw us outperform prominent global vendors and operators. Such industry validation underscores our technology leadership and reinforces the differentiated value we deliver to our customers and stakeholders. Turning to slide 14, as we look ahead, we believe that the current trends, combined with improving capital conditions, will drive sustained investment across our customer base, continuing to fuel growth opportunities for RADCOM.
Yeah.
Go to market activities is.
As noted in slide 13, we attend many key industry events in Q3, including DT campus innovate Americas network eggs, and others, where we met with potential and current customers and business partners are cutting edge solution continues to receive strong recognition from leading industry bodies.
Most recently, our Argentic air solution Broadcom predictive complaint resolution was owner with best AI Ml Innovation Award at the Global Connectivity Award in London.
Benny Eppstein: Most recently, our agentic AI solution, RADCOM Predictive Complaint Resolution, was honored with Best AI/ML Innovation Award at the Global Connectivity Awards in London. The prestigious awards saw us outperform prominent global vendors and operators. Such industry validation underscores our technology leadership and reinforces the differentiated value we deliver to our customers and stakeholders. Turning to slide 14. As we look ahead, we believe that the current trends, combined with improving capital conditions, will drive sustained investment across our customer base, continuing to fuel growth opportunities for RADCOM. Our focus remains on, 1, converting a strong pipeline into revenue and looking to expand our current customer base even further. 2, deepening strategic partnerships to drive innovation and expand our addressable market opportunity. 3, investing in AI and automation to maintain our leadership, driving lower total cost of ownership for real-time network intelligence.
The prestigious awards saw us outperform prominent global vendors and operators.
Such an industry validation underscores our technology leadership and reinforces the differentiated value, we deliver to our customers and stakeholders.
Turning to slide 14.
As we look ahead, we believe that the current trends combined with improving capital conditions will drive sustained investment across our customer base continuing to fuel growth opportunities for outcome.
Our focus remains on one converting our strong pipeline into revenue and looking to expand our current customer base even further.
Benny Eppstein: Our focus remains on: one, converting a strong pipeline into revenue and looking to expand our current customer base even further; two, deepening strategic partnerships to drive innovation and expand our addressable market opportunity; three, investing in AI and automation to maintain our leadership, driving lower total cost of ownership for real-time network intelligence; and four, delivering consistent profitability and cash generation as we expand our global footprint. In conclusion, the third quarter marked another milestone for RADCOM, achieving record results, strong execution, and expanding opportunities across the AI-driven telecom ecosystem. We entered the final quarter of 2025 with strong momentum and clear visibility toward our full-year outlook of 15% to 18% revenue growth, underpinned by disciplined execution, technology leadership, and growing customer adoption. We will provide full-year 2026 guidance when we release our fourth quarter results.
Deepening strategic partnerships to drive innovation and expand our addressable market opportunity.
Three investing in AI and automation to maintain our leadership driving our total cost of ownership for real time network intelligence and.
And for delivering consistent profitability and cash generation as we expand our global footprint.
Benny Eppstein: 4, delivering consistent profitability and cash generation as we expand our global footprint. In conclusion, the Q3 marked another milestone for RADCOM, achieving record results, strong execution, and expanding opportunities across the AI-driven telecom ecosystem. We enter the Q4 of 2025 with strong momentum and clear visibility toward our full year outlook of 15% to 18% revenue growth, underpinned by disciplined execution, technology leadership, and growing customer adoption. We will provide full year 2026 guidance when we release our Q4 results. Before I hand the call over to our CFO, Hadar Rahav, to review the financial results in details, I'd like to take a moment share an update. As announced last week, Hadar will be leaving RADCOM after supporting the transition to our incoming CFO, Hod Cohen, during the Q1.
In conclusion, the third quarter marked another milestone for ratko, achieving record results strong execution and expanding opportunities across the AIG, even telecom ecosystem.
We enter the final quarter of 2025 with <unk>.
Okay.
Okay.
Full year outlook of 15% to 18% revenue growth.
Underpinned by disciplined execution technology leadership growing customer adoption.
We will provide full year 2020 guidance when we release, our fourth quarter results before I hand, the call over to our CFO to review the financial results in detail I'd like to take a moment sharing updates.
Benny Eppstein: Before I hand the call over to our CFO, Hadar Rahav, to review the financial result in detail, I'd like to take a moment to share an update. As announced last week, Hadar will be leaving RADCOM after supporting the transition to our incoming CFO, Hot Kohen, during the first quarter. On behalf of the entire company, I want to thank Hadar for her outstanding leadership and many contributions over the year that helped strengthen RADCOM's financial foundation and growth. We're grateful for her dedication and wish her the very best in the next chapter. We're also pleased to welcome Hot, a highly accomplished finance executive with deep experience in the telecom industry. We're confident he will build on this strong foundation and help drive our continued success. Hadar, over to you. Thank you, Benny, and good morning, everyone. As a reminder, unless otherwise noted, I will discuss non-GAAP results.
As announced last week, a dow will be leaving <unk> after supporting the transition to our incoming CFO hot coil during the first quarter.
On behalf of the entire company I want to thanks, Adele for her outstanding leadership and many contributions over the year that helped strengthen <unk> financial foundation and growth.
Benny Eppstein: On behalf of the entire company, I want to thank Hadar for her outstanding leadership and many contributions over the years that helped strengthen RADCOM financial foundation and growth. We're grateful for her dedication and wish her the very best in the next chapter. We're also pleased to welcome Hod, a highly accomplished finance executive with deep experience in the telecom industry. We're confident he will build on this strong foundation and help drive our continued success. Hadar, over to you.
Rachel for her dedication and wish her the very best in the next chapter.
We're also pleased to welcome holds a highly accomplished finance executive with deep experience in the telecom industry.
We are confident he will build on this strong foundation and help drive our continued success.
Over to you.
Thank you Manny and good morning, everyone isn't remind him.
Hadar Rahav: Thank you, Benny, and good morning, everyone. As a reminder, unless otherwise noted, I will discuss non-GAAP results. Reconciliations between GAAP and non-GAAP measures are provided in our press release and presentation. Additionally, all comparisons are on a year-over-year basis unless otherwise noted. Please turn to slide 16 for our financial highlights. RADCOM delivered another quarterly record in revenues with total revenue of $18.4 million, up 16.2% year-over-year. Simultaneously, we continue to effectively manage expenses while growing our strategic investment in sales and marketing. As a result, we delivered significant improvements in margins and record profitability. The gross margin in the quarter was just over 77%. Please note that our gross margin may vary based on the revenue mix. Our strong gross margin reflects a more favorable revenue mix with a lower proportion of third-party cost elements.
Yes, otherwise noted I will discuss non-GAAP.
Reconciliations between GAAP and non-GAAP measures are provided in our press release and presentation.
Benny Eppstein: The conciliations between GAAP and non-GAAP measures are provided in our press release and presentation. Additionally, all comparisons are on an year-over-year basis, unless otherwise noted. Please turn to slide 16 for our financial highlights. RADCOM delivered another quarterly record in revenues, with total revenue of $18.4 million, up 16.2% year-over-year. Simultaneously, we continue to effectively manage expenses while growing our strategic investment in sales and marketing. As a result, we delivered significant improvements in margins and record profitability. The gross margin in the quarter was just over 77%. Please note that our gross margin may vary based on the revenue mix. Our strong gross margin reflects a more favorable revenue mix with a lower proportion of third-party cost elements. We believe this level of gross margin will be sustained in the fourth quarter. Our non-GAAP gross R&D expenses for the third quarter were $4.7 million, up 11.6% year-over-year.
Additionally, a compelling argument.
Macy's.
Otherwise noted.
Please turn to slide 16 financial.
Well I couldn't delivered another quarterly record in revenues with total revenue of $18 4 million up 16, 2% M O M.
Simultaneously, we continue to effectively manage expenses, while growing our strategic investment in sales and marketing.
As a result, we delivered significant improvements in margins and record profitability.
The gross margin in the quarter was just over 77%.
Please note that our gross margin may vary based on delays in uniques.
Our strong gross margin reflects a more tangible than whether uniques.
Propulsion of third party cost element.
We believe this level of gross margin will be sustained in the fourth quarter.
Hadar Rahav: We believe this level of gross margin will be sustained in Q4. Our non-GAAP gross R&D expenses for Q3 were $4.7 million, up 11.6% year over year. This increase reflects our focus on deepening collaborations, driving innovation, and expanding our portfolio. We plan to continue our strategic R&D investments to deliver advanced intelligence solutions with an emphasis on agent-to-agent and multi-modal workflows while supporting our strategic partnerships and productization plans. During the quarter, we received a grant of $189,000 from the Israel Innovation Authority, consistent with the same quarter last year. Of this amount, approximately $130,000 is related to programs from the prior years. As a result, we expect the grant in Q4 to be approximately $50,000.
Our non-GAAP gross R&D expenses for the third quarter.
So $7 million.
At 11, 6% <unk> E M.
This increase reflects our focus on deepening collaborations driving innovation and expanding our portfolio.
Benny Eppstein: This increase reflects our focus on deepened collaborations, driving innovation, and expanding our portfolio. We plan to continue our strategic R&D investments to deliver advanced intelligence solutions with an emphasis on agent-to-agent and multi-model workflows while supporting our strategic partnerships and productization plans. During the quarter, we received a grant of $189,000 from the Israel Innovation Authority, consistent with the same quarter last year. Of this amount, approximately $130,000 is related to programs from the prior years. As a result, we expect the grant in the fourth quarter to be approximately $50,000. Our net R&D expenses for the third quarter of 2025 were $4.5 million, an increase of $483,000 compared to the third quarter of 2024. Sales and marketing expenses were $4.6 million, an increase of 15.4% compared to the third quarter last year, reflecting our intentional investment to grow our sales presence.
We plan to continue our strategic R&D investments to deliver advanced intelligence solutions.
In emphasis on agent to agent in lithium or that will close by supporting our strategic partnerships input activation plan.
Yeah.
During the quarter, we received a grant of $189000 from the Israel Innovation Authority.
Consistent with the same quarter last year.
Of this amount approximately $170000 is related to qualcomm's from E.
Iran.
As there is.
We expanded the grant in the fourth quarter to be approximately $50000.
Net R&D expenses for the third quarter of 2025, we will solve growing $5 million, an increase of $483000 content to the third quarter of 2024.
Hadar Rahav: Our net R&D expenses for Q3 2025 were $4.5 million, an increase of $483,000 compared to Q3 2024. Sales and marketing expenses were $4.6 million, an increase of 15.4% compared to Q3 last year, reflecting our intentional investment to grow our sales presence. We expect a gradual increase in sales and marketing in the coming quarters to support a growing pipeline and expand our presence in high-value regions. Non-GAAP operating margin was $3.8 million, beating the record we achieved in Q2 with an operating margin of 20.9%.
Sales and marketing expenses were $12 6 million, an increase of 15, 4% compared to the third quarter last year, reflecting our intentional investment to wireless.
<unk>.
We expect a gradual increase in sales and marketing in the coming quarters to support a growing pipeline and expand our presence in and value chain.
Benny Eppstein: We expect a gradual increase in sales and marketing in the coming quarters to support a growing pipeline and expand our presence in high-value regions. Non-GAAP operating margin was $3.8 million, beating the record we achieved in the second quarter with an operating margin of 20.9%. Non-GAAP net income was $4.9 million, or $0.29 per diluted share, the highest in the company's history, compared to $3.7 million, or $0.23 per diluted share last year. On a GAAP basis, as shown on slide 19, our net income for the third quarter of 2025 was $3.5 million, an increase of 54% year-over-year. GAAP earnings per share were $0.21 per diluted share, compared to $0.14 per share last year. We ended the third quarter of 2025 with 319 employees.
Okay.
non-GAAP operating margin was 3.8 million daus beaten delinquent, we achieved in the second quarter.
<unk> operating margin of 29%.
non-GAAP net income was $4 9 million or 29.
Hadar Rahav: Non-GAAP net income was $4.9 million, or $0.29 per diluted share, the highest in the company's history, compared to $3.7 million or $0.23 per diluted share last year. On a GAAP basis, as shown on slide 19, our net income for Q3 2025 was $3.5 million, an increase of 54% year over year. GAAP earnings per share were $0.21 per diluted share compared to $0.14 per share last year. We ended Q3 2025 with 319 employees. Turning to the balance sheet on slide 23.
Sure.
And the company is too weak compared to <unk> 7 million or <unk> 23 cents per diluted share last year.
Okay.
On a GAAP basis.
Slide 19.
Net income for the third quarter of 2025, or $3 5 million, an increase of 54% L. O E M.
Earnings per share was 21 cents per diluted share compared to 40 cents.
Sure.
And then the third quarter of 2025 between.
319 employees.
Turning to the balance sheet on slide 23, we closed the quarter with cash cash equivalents and short term bank deposits of 106 7 million.
Benny Eppstein: Turning to the balance sheet on slide 23, we closed the quarter with record cash equivalents and short-term bank deposits of $106.7 million, supported by a $5.1 million positive cash flow in the third quarter, driven by our strong operating performance. That concludes our prepared remarks. Thank you, and I will now turn the call back to the operator for your questions. Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If dialing in, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the hands before pressing the numbers. If on Zoom, use the chat button located on the bottom of your screen. Please type your full name and your company's name before the question. Please stand by while we pull for your question.
Hadar Rahav: We closed the quarter with record cash equivalents, and short-term bank deposits of $106.7 million, supported by a $5.1 million +cash flow in Q3, driven by our strong operating performance. That concludes our prepared remarks. Thank you, and I will now turn the call back to the operator for your questions.
Supported by a $5 1 million positive cash flow in the third quarter driven by our strong operating performance.
That concludes our prepared remarks, thank you and I will now turn the call back to the <unk> question.
Thank you ladies and gentlemen at this time, we'll begin the question and answers.
Operator: Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. The first question is from Arjun Bhatia of William Blair. Please go ahead.
Thanks for dialing in please press star one if you wish to cancel your other question you Press Star two.
In this particular segment kind of live enhancing before pressing the numbers.
If you have the churn back and located on the bottom on your screen. Please type your full name and your company named for the question. Please.
Please standby when he portfolio question.
The first question is from agile data of William Blair.
Benny Eppstein: The first question is from Arjun Beta of William Blair. Please go ahead. For the newly launched high-capacity user analytics solution, what are the early feedbacks from customers so far, and what are you most excited about? Thanks for the question. We're super excited about it. It's currently in a couple of field trials. We see great performances, and we see targeting this to materialize in 2026. So far, we are very happy with the performance we've seen this year. Got it. Helpful. And in terms of you mentioned expansion within existing customers this quarter, what trends are you seeing overall in terms of expansion within your existing customers? And in particular, what are the specific expansion efforts from these customers are you seeing in terms of adding to their existing stack? Are you talking specifically about the NVIDIA piece or generally speaking? I think both.
Please go ahead.
Therefore, the newly launch high capacity Ethernet analytics solution, what are the early feedback from customers. So far and what are you most excited about.
Arjun Bhatia: For the newly launched high-capacity user analytics solution, what are the early feedbacks from customers so far, and what are you most excited about?
Alright. Thanks for the question, we're Super excited about it and a couple of field trials with the brake components.
Benny Eppstein: Hey, thanks for the question. We're super excited about it. It's currently in a couple of field trials. We see great performances, we see targeting this to materialize in 2026. So far, we're very happy with the performance we've seen to date.
Historically targeting this materialize in 2026th so thus far we were very good performance businesses.
Got it helpful and in terms of you mentioned expansion with an existing customer this quarter.
Arjun Bhatia: All right. Helpful. In terms of, you mentioned expansion within existing customers this quarter, what trends are you seeing overall in terms of expansion within your existing customers? In particular, what are the specific expansion efforts, from these customers are you seeing in terms of adding to their existing stack?
What <unk> seen overall in Kansas Amgen with many of our existing customers and in particular, what are the specific expansion effort.
From these customers are you seeing in terms of adding to their existing stock.
Are you talking specifically about the video piece or generally speaking.
Benny Eppstein: Are you talking specifically about the NVIDIA piece or generally speaking?
I think Bob sorry to kind of narrow down first and then broader picture overall, what trends you're seeing that would be great.
Arjun Bhatia: I think both. If you could kind of narrow it down first and then broader picture overall, what trends you're seeing, that would be great.
Benny Eppstein: So if you could kind of narrow down first and then broader picture overall, what trends you're seeing, that would be great. Sure. Overall, we see a pretty good build-up of a solid pipeline through the year. Right now, also building toward the end of this year. We're still targeting double-digit growth, and we still see more and more opportunities coming up within 2026. Okay. Awesome. Thank you. Thanks. Thanks. I repeat. If you have a question, please press star one. If you wish to cancel your request, please press star two. Please stand by while we pull from your question. The next question is from Ryan Kunz of Nidham. Please go ahead. Great. Thank you. I wanted to ask about your visibility as it relates to kind of looking into next year. It sounds like you're feeling a little more confident. Can you give any color there around visibility?
Sure.
Overall, we see pretty good.
Benny Eppstein: Sure. Overall, we see pretty good build-up of a solid pipeline, through, you know, through the year right now, also building toward the end of this year. We're still targeting double-digit growth, and we still see more and more opportunities coming up within 2026.
Solid pipeline.
It grew through the year right now we're building towards.
This year.
We're targeting double digit growth and we still see more and more opportunities coming up on pinpoint.
Thank you.
Okay. Thank you.
Arjun Bhatia: Okay. Thank you.
Hi, Pete.
Benny Eppstein: Great. Thank you.
Do you have a question. Please press star one if you wish to cast any only quest. Please press star two.
Operator: I repeat, if you have a question, please press star one. If you wish to cancel your request, please press star two. The next question is from Ryan Koontz of Needham. Please go ahead.
And my only portfolio okay.
The next question is four nine points of Needham. Please go ahead.
Great. Thank you I wanted to ask about your visibility.
Ryan Koontz: Great. Thank you. I wanted to ask about your visibility, as it relates kind of looking into next year. It sounds like you're feeling a little more confident. Can you give any color there around visibility? As you look, you know, ahead into next year, any major renewals or anything coming up that would make you concerned about maintaining your current run rate of revenue into 2026?
As it relates to kind of looking into next year.
It sounds like you feel a little more confidence can you give any color there around visibility.
And as you look ahead into next year any any any major renewals or anything coming up that would make you concerned about.
Benny Eppstein: And as you look ahead into next year, any major renewals or anything coming up that would make you concerned about maintaining your current run rate of revenue into '26? We're still targeting—thanks, Ryan—but we're still targeting double-digit growth for next year. We do see lots of new opportunities coming up in the market for us, specifically to the cloud native and the 5G standalone cases, driving a lot of transformation on the customer side. And obviously, the line of expense, we still see some activities. We need to consolidate certain applications, and we're going to support that. So overall, I think we can continue to support the double-digit growth also in 2026. That's great. Great to hear. In terms of earnings leverage next year, it sounds like you're planning to spend a little more on the sales and marketing line.
About maintaining your current run rate of revenue into 'twenty six.
We are still targeting thanks, Brian, but we are still targeting double digit growth for next year.
Benny Eppstein: Thanks, Ryan. We're still targeting double-digit growth for next year. We do see a lot of new opportunities coming up in the market for specifically to the move, the cloud native and the 5G Standalone basis, driving a lot of transformation on the customer side. Obviously the line of expense, we still see some activities need to consolidate certain application, and we're going to support that. Overall, I think we can continue to support the double-digit growth also in 2026.
We do see a lot of the opportunities coming up in the market for specifically to demo the move the cloud native and <unk> stand alone.
This is driving a lot of spectrum installation on the customer side.
And then obviously the.
And I've been with the system.
Excellent.
Application.
So overall I think we can continue to support the double digit.
When you purchased it.
That's great great to hear in terms of earnings leverage for next year. It sounds like you're planning to spend a little more on the <unk>.
Ryan Koontz: That's great. Great to hear. In terms of earnings leverage next year, it sounds like you're planning to spend a little more on the sales and marketing line. Any other like puts and takes you'd point out on the leverage 2026?
Sales and marketing line any other puts and takes you'd you'd point out on the.
Benny Eppstein: Any other puts and takes you'd point out on leverage '26? Yeah. Marketing and R&D. Yes. That's right. Great. And maybe last one, just a macro question about 5G core. Certainly sounds like we're starting to see some real deployments out there, at least in the US. Can you validate that view? And also any updated thoughts on the other kind of geographies in APAC or EMEA around 5G core deployments, standalone? Absolutely. We see good momentum on 5G core, standalone, open RAN as well through the US, Europe, and some areas in Japan and Asia. And it is driving a lot of the activities, as I mentioned earlier, having a cloud-native application to support the troubleshooting and customer experience. The NVIDIA piece is really driving a full user plan population visibility, and this is also driving a lot of excitement on the customer side. Great. Appreciate the thoughts.
On leverage.
46.
The marketing and R&D.
Right.
Benny Eppstein: Yeah, marketing and R&D. Yes, that's right.
Right.
And then last one just a macro question about.
Ryan Koontz: Great. Maybe last one, just a macro question about 5G core. Certainly sounds like we're starting to see some real deployments out there, at least in the US. Can you know, validate that view and also any updated thoughts on the other kind of geographies in APAC or EMEA around 5G core deployments standalone?
<unk> certainly sounds like we're starting to see some real deployments out there.
At least in the U S can you validate the view and also any.
Updated thoughts on the other geographies.
APAC or EMEA around five core deployments general surgery.
We see good momentum on pricing.
Benny Eppstein: Absolutely. We see good momentum on 5G core, standalone, Open RAN as well, through the US, Europe and some areas in Japan and Asia. And it is driving a lot of activities, as I mentioned earlier, moving, having a cloud-native application to support the troubleshooting and customer experience. The NVIDIA piece is really driving a full user plane, population, visibility, and this is also driving a lot of excitement on the customer side.
Okay.
On the call.
As well.
The U S Europe.
Primarily in Japan.
Asia.
And it is driving.
This is as I mentioned earlier.
Moving.
Having a cloud native application for support the trouble shipping and customer experience.
Then we have to be it is really driving a full user then the population.
And this is not something that I think will have on our customers.
Right.
Alright, great I appreciate the thoughts.
Thank you.
Ryan Koontz: Great. Appreciate the thoughts, about that. Thank you.
Thanks, so much.
Benny Eppstein: Thank you. Thanks so much. Please continue with RADCOM LTD third quarter 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.
This concludes <unk> third quarter 2025 results conference call.
Benny Eppstein: Thanks so much.
Operator: This concludes RADCOM Ltd. Q3 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.
Thank you for your participation you May go ahead and disconnect.
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